The founding member hospitals of the National Alliance of Integrated Afib Centers say the top goals of the multidisciplinary, data-driven effort are to stop inappropriate cardiac procedures and to improve the quality of care.
Five heart treatment centers from across the country and a leading atrial fibrillation patient advocacy group for have formed a multidisciplinary alliance to treat people with irregular heartbeats.
The National Alliance of Integrated Afib Centers says there exists little coordination or data sharing about the heart ailment even though by some estimates that 5.1 million people in the United States have a cardiac rhythm disturbance, and that the number could grow to 15.9 million by 2050.
NAIAC President Jonathan Philpott, MD, a cardiothoracic surgeon at Sentara Heart Hospital in Norfolk, VA, says member hospitals will lead the nation in Afib research, foster and refine synergies among cardiac specialties for Afib patients, and parse mountains of specific patient data outcomes with a goal of sharing and standardizing best practices.
"We share a common goal to improve the quality of care with folks who have Afib and to stop inappropriate procedures and go with more effective and more durable procedures," says Philpott, who is himself an Afib patient.
NAIAC will work with StopAfib.org to identify patients and steer them to the nearest member hospital. Each patient will be treated by a cardiothoracic surgeon who works with an electrophysiologist, and a patient care coordinator. The care team and the patient will design the best treatment care plan tailored to the patient's needs.
In a phone interview this week, Philpott spoke in detail about the goals and structure of NAIAC, which is up and running, and what it hopes to achieve. The following is an edited transcript.
HLM: How will NAIAC operate?
JP: The alliance is designed so that patients coming to it are going to see all of their options. When patients come to see a doctor, the doctor typically just talks about what it is they do. My group said this was an old way of thinking.
Let's do this as a heart team, where the patient comes in and you have all the experts there, anesthesia, cardiology, surgery, and let's figure out with everybody looking at the patient what the right thing is, instead of rewarding one group of people for volume.
HLM: Why did you select these five hospitals as founding members?
JP: What we tried to do is look across the country to find an initial group of centers that embraced this idea, but had also shown a good track record with all of the platforms—medical management, catheter ablation, hybrid ablation—and we are also facile with the full Cox maze procedure, which remains the gold standard.
It is interesting that when we started looking across the country there are not a lot that can do all that.
HLM: How exactly are you affiliated?
JP: We share a common goal to improve the quality of care with folks who have Afib and to stop inappropriate procedures and go with more effective and more durable procedures.
HLM: What will NAIAC centers do differently?
JP: We want to be data-driven. To be in the alliance you have to be able to offer those services, but you also have to agree that you will be wide open with your outcomes. To stay in the alliance you have to maintain the capabilities and volume and the ability to do all three of the interventions very well. But you also have to agree to share your data with the data base we are designing especially for the alliance.
The database is unique in that it is going to capture any type of ablation that is performed whether it is catheter or surgical and the follow up is going to be rigid within the first year at three, six, and nine months every year after that.
With all of the centers participating in the same way and following the data we will quickly be able to perform very fast quality improvement, not only amongst the centers but within each center.
HLM: Why does Afib need centers of excellence?
JP: I can tell you exactly right now what my coronary mortality rate is and so can any other surgeon who is worth their salt in the United States because it is tracked daily. If you look at transplants it's the same thing. You get to Afib and it's kind of like [you hear] crickets.
I want these centers to start off and say we are going to be data-driven and we are going to start shifting care to models that work and also save institutions down the road.
The old way was if a guy had a catheter ablation that failed he got rewarded and so did the institution. The patient would come back and have another catheter ablation and if that didn't work they still got rewarded for failure.
I see the future as teams being rewarded for quality. Maybe fewer procedures, but the ones that are performed are the ones that work.
The other part of the database I am most excited about is tracking readmissions. Afib readmissions are very common and super expensive. We have already seen here that the folks who got ablated up front cost a little bit more, in those cases, once we did it they quit coming back.
We wanted to build that into the database. Are we saving money over time by doing a higher quality ablation up front instead of multiple low quality ablations? That is going to be tracked. Overall costs, readmissions, the number of readmissions from complications from Afibs. For hospital administrators that is going to be fantastic data.
HLM: How do you determine who your patients will be?
JP: There is this big section of the population with Afib that have been treated once or twice, but they are highly dissatisfied and they don't know who to go to. That is the target group. We are looking for patients who are seeking education about an honest appraisal of where they are with their Afib and what their options may or may not be.
So, we set the whole thing up, we partnered with stopafib.org, which is also very motivated by the fact that there is this gigantic population of folks across the country with Afib who feel like they aren't getting the answers they need.
They developed a website that is the go to site for people with Afib. The whole idea is that if a new patient has Afib they would probably land on this site and it would link them to NAIAC and that would funnel them to one of the centers near them.
HLM: Do you expect more hospitals to join NAIAC?
JP: Absolutely. We wanted to work the kinks out in the first year, but next year we are going to start taking applications. We are already getting requests from multiple hospitals to join. The goal for us though is we can never let this turn into a marketing scheme.
It has to be a quality driven alliance. It is probably going to become an international site very quickly and in the next five years we would like to move to 30 sites minimum. But I don't want to turn it into 100-site thing. I'd rather it stick to maybe 20 or 30 sites across the country that are actually the real deal.
On the financial part, we probably just to keep the alliance growing are almost certainly going to have to demand dues from members. We talked about that but we haven't enacted it. That is probably going to start. The database is going to need a little bit of money but the participating institutions will pay a fee to use that.
A nonprofit health system has developed a nonprofit subsidiary to challenge well-established, well-run, for-profit players for a piece of the hyper-competitive $60 billion weight-loss industry.
In September 2012 I wrote a column addressing a report that showed that obesity is particularly rampant in rural America, afflicting an estimated 40% of the population. I suggested then that it was time for healthcare providers and nontraditional sources to take up proactive measures to address the epidemic.
In October 2012 the nation's largest nonprofit rural healthcare system launched the first of its Profile by Sanford weight loss clinics in Sioux Falls, SD. Since then clinics have opened in Minnesota and the Dakotas and this week Profile by Sanford opens its ninth "retail" weight loss center in Brookings, SD, a town of about 23,000 souls located 190 miles due east of Pierre.
Nate Malloy, COO at Profile by Sanford, says the health system hopes to have about 30 locations operational by this time next year and "100+ locations operating in most of the United States" within the next three to five years.
Profile by Sanford is not particularly innovative, and that is not a bad thing. The program uses a combination of well-established practices that other weight loss programs have been using successfully for years, such as face-to-face individualized meetings with coaches to set and keep weight loss goals, meal plans, and using wireless technology to monitor progress.
"We focus on three core areas; nutrition, activity and lifestyle," Malloy says. "Every member that comes into the program receives an individualized plan with each of those core areas."
While the weight loss product itself is tried and tested, Profile by Sanford represents a new dynamic in healthcare. Every day new players from non-healthcare backgrounds enter the nearly $3 trillion healthcare sector to tap into services that for decades have been the domain of traditional providers such as hospitals and physicians.
Private equity firms are buying hospitals. Drugstore-based walk-in clinics are sprouting like mushrooms. This churn is good. It shakes complacent traditional providers and forces them to reevaluate how they deliver care and how much they charge.
Profile by Sanford turns that model on its ear. A nonprofit health system has developed a nonprofit subsidiary to challenge well-established, well-run, for-profit players for a piece of the hyper-competitive$60 billion weight-loss industry.
This is a great idea on many levels.
First, we know that overweight and obesity are still particularly acute in rural areas, and the associated health problems are well known. Sanford Health is the nation's largest rural healthcare system, and it sees and treats the dire consequences first hand. Developing weight loss programs are a logical response born from experience.
Second, as we move toward population health and value-based care, health systems will have a vested interest in making sure the people they serve are eating properly and exercising sufficiently to proactively mitigate obesity-related illnesses.
Third, a successful weight-loss program is an excellent way to build brand value and customer loyalty. There are few things more personal and challenging that trying to lose weight. It is something that most people in this country confront in their lives. Clients of Profiles by Sanford who embrace a structured weight-loss regimen likely will succeed, and they will remember the people who helped transform their lives.
Fourth, weight loss clinics provide an excellent route for traditional providers to enter retail healthcare. These store-front operations do not require a lot of capital investment or high-salaried personnel. And they provide a great way for traditional providers to promote their brand beyond the walls of the hospitals.
Sanford Plays up Retail Angle
"We have taken an approach that I would call a combination of retail in a clinical setting," Malloy says. "We are locating mostly in more retail environments, primarily neighborhood-type settings near the grocery store, those types of locations. Part of it is convenient access for our members. Not everybody wants to go into a hospital or clinic for all services."
Malloy was quick to provide price points. There is a $300 annual membership fee, and new members are given a scale that measures weight, body fat percentage, bone density, and hydration. The "meal replacement products" cost $40 to $80 a week.
That sounds a bit pricey in a town such as Brookings, SD, where the median annual householdincome is about $41,500. Malloy contends it's a good value. "We believe this is something that will do well in a community like Brookings," he says. "There are some interesting statistics on the average American diet and how much people spend each week and our costs are very much in line with that."
No health plans cover Profiles. However, Malloy says the annual membership fee is cut in half if clients are referred by physicians. In addition, Profiles cultivates employer partner programs that allow employees to purchase meal replacement products at a 20% discount. "The majority of our members are activated through employer partner programs," Malloy says.
As Profiles nears its second anniversary, Malloy says it's able to measure success.
"We have been operating a little more than 18 months and we've grown from 50 members at that time to more than 5,000 members now," Malloy says. "We are seeing a lot of members stick with the program not just for one year but to stay engage in a second year after they'd lost the weight in what we call our sustained phase. We are seeing over 33% of our members renewed for an additional year to stay with the program which I think is great."
The capitated Regional Care Organization model is designed to be responsible for all aspects of care for Medicaid recipients in 10 counties in northern Alabama. CMS approval is pending.
Huntsville Hospital Health System and Sentara Health Plans have formed a joint venture to manage a Regional Care Organization that will serve more than 120,000 Medicaid recipients in northern Alabama when it opens next year.
The capitated RCO model was approved last year by the Alabama Legislature, which created five RCO regions across the state to become operational in October, 2016. The plan has yet to gain a waiver from the federal Centers for Medicare & Medicaid Services, however.
That potential iceberg has not stopped HHHS and Norfolk, VA-based Sentara from sailing ahead to create Alabama's first not-for-profit RCO, which should be operational by October, 2015, one year ahead of the state mandate.
David Spillers, CEO of HHHS, says he's not particularly stressed about riding the leading edge of a profound change in the way care is delivered, even as the details have yet to be finalized.
"Hospital systems like ours have to go out and get into the population health management arena. Either we jump out there and do it, or the state is just going to bring in some commercial managed care company to do it to us," Spillers said in a telephone interview.
"I'm not so sure that is worse than taking the risks we are. In fact I'm convinced it's better to take the risk we are than to just let somebody else come in and continue to take patients out of our hospitals and not have any opportunities on the other side to make that up."
The HHHS/Sentara RCO will be responsible for all aspects of care for Medicaid recipients in 10 counties in northern Alabama. The new company will be headquartered in the Huntsville area and is expected to create about 400 new jobs in Alabama and Virginia.
Sentara Health Plans President Michael M. Dudley says his company and HHHS anticipate a 50-50 risk sharing arrangement under the RCO.
"This is not new business to us. We've been in this business for 30 years and more specifically, Medicaid managed care for about 20 years here in Virginia," Dudley said in a telephone interview. "We serve about 170,000 members all over Virginia. We are a statewide provider of Medicaid services in Virginia and have a pretty good track record of serving this population."
"We see it as a great opportunity to scale up a business line that we have done very well with in Virginia and we think we have a lot to offer the good folks of Alabama as they are moving into more of an accountable care scenario with how they deliver services to Medicaid populations."
Dudley acknowledged that the waiver for the program has yet to be approved, "but if we waited until the waiver was granted it would be way too late to implement on schedule that we now have for October 2015. So, we are beginning to make plans for implementation. We are working well with our partners in Alabama and we expect the waiver will be granted in the next few months and everything will fall into place."
Spillers says HHHS wanted a partner with the expertise in managing Medicaid populations and who was willing to share the risk under the capitated model for the population they're serving.
"We felt like if they had skin in the game they're more likely to make sure we are successful," he says. "If you are just providing services and you are going to make your money regardless of what happens to us that is not a partnership as far as I am concerned."
Spillers says HHHS wanted a partner with the expertise in managing Medicaid populations and who was willing to share the risk under the capitated model for the population they're serving.
"We felt like if they had skin in the game they're more likely to make sure we are successful," he says. "If you are just providing services and you are going to make your money regardless of what happens to us that is not a partnership as far as I am concerned."
Spillers says being on the leading edge of the RCO movement carries risks and rewards.
"If we didn't have an experienced partner like Sentara I'd be running from this instead of to it," Spillers says. "The state was excited about us coming up first because they want to see it work before they expand it. It's better for them. It also gives us the opportunity to go into other regions if other regions want to partner with us and not have to bring up multiple regions at one time."
Dudley agrees.
"Any time you are the first to the market you are taking some risks that others maybe want to lay back and see about," he says. "On the other hand, given that we have 20 years of experience here in Virginia, we really know this business. We know what we are getting into. We will be able to see very rapidly if the business is going to be sustainable down there."
"We expect that the state of Alabama will be reimbursing at levels that will be sustainable. But if we get six months into this, eight months into this, and the state is not able to offer reimbursement at a rate that is sustainable, then we will have to rethink this whole thing, but we don't expect that at this point."
OH State's Wexner Medical Ctr. Enters Affiliation The Ohio State University Wexner Medical Center and Ohio Valley Health Services and Education Corp. are creating an affiliation that will serve the Ohio Valley region, the two health systems have announced jointly.
Ohio Valley Health Services & Education Corp. is the parent company of Ohio Valley Medical Center in Wheeling, WV, and East Ohio Regional Hospital in Martins Ferry, OH.
"We're excited that this affiliation will expand access to specialized medical care for many more people in our region," Steven G. Gabbe, MD, senior vice president of Health Sciences and CEO of Ohio State's Wexner Medical Center, said in prepared remarks. "We also see many opportunities to increase medical education and clinical research in the area, and to help OVMC/EORH create innovative health solutions for the community."
Under the affiliation, the two health systems will remain independent, but work together to develop close-to-home care options for residents who would normally travel to Ohio State for highly-specialized treatments. Collaborations in areas such as cancer, heart and vascular care, neurosurgery, telemedicine, urology, diabetes management and community wellness/prevention programs are being discussed.
The two systems will also explore other opportunities, such as adding OVMC and EORH as clinical rotation sites for some of Ohio State's College of Medicine students, and expanding patient access to clinical trials, the systems said in a joint media release.
"We're proud to bring advanced, specialized care from a nationally ranked academic medical center to our patients and to serve a critical need in the Ohio Valley," Michael J. Caruso, president/CEO of OVHS&E, said in a media release. "Additionally, by working with Ohio State, we'll achieve greater efficiencies, lower costs and build a stronger community hospital system through shared electronic health records, group purchasing programs and other shared services."
Ohio State's Wexner Medical Center and OVMC/EORH will form an affiliation advisory council that will set the overall strategic goals, facilitate the plans and identify opportunities for both hospital systems.
Spillers says HHHS wanted a partner with the expertise in managing Medicaid populations and who was willing to share the risk under the capitated model for the population they're serving.
"We felt like if they had skin in the game they're more likely to make sure we are successful," he says. "If you are just providing services and you are going to make your money regardless of what happens to us that is not a partnership as far as I am concerned."
On Monday, the state's new Rural Hospital Stabilization Committee sat for nearly three hours at its inaugural meeting to discuss ways to keep more rural hospitals from shuttering.
The 15-member committee was created in March by Republican Gov. Nathan Deal. It's comprised of politicians, hospital administrators, rural health advocates, physicians, and other healthcare experts and concerned citizens. Leading the agenda on Monday was Deal's three-point plan which includes allowing financially strapped rural hospitals to transform into freestanding emergency departments.
Palpably absent, however, was any discussion of expanding the Medicaid rolls in Georgia and tapping the billions of dollars in federal money that come with it.
The people appointed to the committee appear to be honest and conscientious and to truly care about the perilous state of rural hospitals in their state. They seem to want to find a solution, but they are severely constrained, and they know better than to carp about a Medicaid expansion that is not going to happen.
Unfortunately, when the single most important, immediate, and glaringly obvious component of any effort to help rural providers is taken off the table, it becomes hard not to dismiss this project as an election year stunt to provide political cover for Deal, who has been heavily criticized for his decision to forego the federal money.
Neal has said Georgia cannot afford to expand its Medicaid rolls, which he says would cost the state about $4.5 billion over the next decade. He has also suggested that the federal government might at some point change the terms of the deal, and force states to shoulder more of the cost.
Other studies suggest that the state cannot afford to reject the expansion money. By some estimates, the state's healthcare providers contend with about $2.8 billion a year in uncompensated care. A Kaiser Family Foundation report estimated that accepting Medicaid expansion money would cost Georgia about $2.5 billion over the next decade.
That state money, however, would bring down about $33 billion in federal matching funds, and it would reduce the uncompensated care bill in the state by $700 million.
The governor's refusal to expand Medicaid also undermines his efforts to loosen state licensure restrictions and allow some hospitals to strip down and become freestanding emergency departments, which is actually an intriguing idea.
Like everything else in healthcare, the devil will be in the details. But providing triage in remote areas that otherwise cannot support even a critical access hospital makes sense and it is worth considering. However, it's not clear how much that transition would cost, or who would pay for it now that Medicaid expansion money is off the table.
Bill Custer, a professor at the Institute for Health Administration at Georgia State University, says the panel's task must be placed in context. "Given the constraints that they are not going to expand Medicaid, then trying to organize the care delivery system in rural areas to be more sufficient makes a lot of sense," he says.
"Where we are seeing a lot of irony is that the resources to help these rural areas would be more readily available if the state expanded Medicaid. The investment by the state to bring more healthcare dollars to rural areas would have been small relative to the benefit to those areas."
Rural providers aren't the only people harmed by the governor's refusal to expand Medicaid. The cost of uncompensated care that would have been reduced will instead be picked up through cost shifting.
"Healthcare is an integrated system and financing goes across the system," Custer says. "Without these resources people buying private coverage are paying more than they would if they expanded Medicaid. People are having to travel farther to get care, regardless of how they are paying for that care. So it's not just affecting the lower incomes, it's affecting all Georgians."
If Deal placed the welfare of rural hospitals and the people they serve above partisan politics, his efforts to stabilize providers would include pressing his party to accept the Medicaid expansion money.
That money by itself will not solve every problem. Without additional funding, however, rural hospitals will close or restrict services, access to healthcare will worsen, and people will die.
In an exclusive partnership deal, Akron General Health System will retain majority ownership and there will be no attempt to impose Cleveland Clinic's employed physician model on private practices affiliated with Akron General.
Cleveland Clinic will become a minority owner of Akron General Health System, making two health systems exclusive partners in the highly competitive Summit County Ohio market.
Thomas L. "Tim" Stover, MD, MBA, president/CEO, Akron General Health System, declined to detail the financial terms of the deal, which includes a "substantial" investment by the Clinic. Nor could he provide a specific breakdown of the Clinic's minority ownership.
"Frankly we don't know yet," Stover said in a telephone interview Tuesday. "We have to do an evaluation of our entire system and then we are going to back into the percentage. But it will be significantly less than 50%."
Stover says it was important for Akron General to retain majority ownership of the health system because "first of all we want to make sure that this thing works."
It was also a question of local control.
"Even though we are only 25 minutes away from Cleveland, Akron, OH is Akron, OH. People want to get their care here," Stover said.
"I have always looked at The Clinic as an asset and not a competitor. They take care of the sickest of the sick. It's great to have that resource this close. But on the other hand, for what most people want taken care of, we have it here at Akron General. It is a good way to start. Both of us have the idea that as time goes on there will be a bigger relationship coming down the road. But both of us are comfortable with this position at the beginning."
Ann Huston, chief strategy officer at Cleveland Clinic, says the deal is expected to be finalized within the next two months.
"We are driving hard over the next several weeks to get our definitive agreement architected," Huston said in a telephone interview Tuesday. "One of the things we did at the beginning our discussions was talk very specifically about what was important to each organization and what the objectives of this relationship would be. And one of those very clear objectives was to continue to have strong Akron-based leadership of Akron General Health System. That had a lot to do with how we crafted the arrangement."
Hospital sector analyst Allan Baumgarten said in an email exchange Tuesday that the deal makes sense for both health systems fighting for a leg up against strong competition in the hotly contested Akron market.
"In short you have Catholic Health Partners buying a share of the Summa Health, the other Akron system and Akron General needing capital and care management help," Baumgarten says. "Cleveland Clinic has wanted a presence in Summit County for a long time. University Hospital already is there and would probably do something with Akron General in the Clinic didn't get there first."
Although Akron General is a fairly large healthcare system, Stover says it had to be bigger in the Akron market.
"Northeast Ohio is heavily managed as far as managed care is concerned and we have a competitor in town (Summa Health) with their own insurance company," he says. "It's difficult for us to do population health without a partner that can have some influence on a payer."
"Not only that, but the market has completely changed. The majority of the competition that Cleveland Clinic looked at when they were talking about Cuyahoga County was University Hospital. University Hospital has made significant inroads to Summit County. They've bought 16 of our primary care physicians."
"Remember, about 65% of the Clinic's revenues come from eight surrounding counties and we are one of them. They can't afford to lose this market in Summit County, No. 1. And UH is here and they have to compete against them."
Huston says Cleveland Clinic already sees many patients from Akron, which is only 35 miles away. "When we think about our service area, Akron is just core to our service area," she says. "It is a very natural relationship for us to have, to formalize it and continue to grow services, programs, access in that market together."
Both health systems played up the opportunity for physicians in Akron to participate in Cleveland Clinic's Quality Alliance, which fosters collaboration between independent and employed physicians to improve quality of care, reduce costs and increase efficiency, and provide access to expertise, data and experience.
However, Stover says there will be no attempt to impose Cleveland Clinic's employed physician model on private practices affiliated with Akron General.
"Most of our compensation models are revenue minus expense, pretty similar to what we did in private practice," he says.
"The Clinic has learned that they can't push their physician model on an independent private practice facility or community. They are not demanding that our docs become a part of their model. They are very aware of the environment they are coming into. They don't want to change that culture. They want to enhance it. We are going to have multiple different models as far as physician alignment is concerned. It's not an issue for us."
In a separate announcement this week, Cleveland Clinic said it has formed a joint venture with Select Medical to provide inpatient rehabilitation services in Northeast Ohio.
Under the deal, the two organizations will expand these services on Cleveland's West Side by building a new 60-bed adult inpatient rehabilitation hospital in Avon, OH.
The two organizations have also entered into a management agreement, effective Aug. 1, 2014, to enhance operations in existing Cleveland Clinic rehabilitation facilities. The deal will create a residency program for physicians in physical medicine and rehabilitation.
Saying Tenet is "bullish on Texas," a senior executive describes the organization's majority interest stake in its fourth hospital in the Dallas market.
Tim Adams
Tenet's Central Region CEO
Tenet Healthcare Corporation has brought a fourth hospital into its Dallas market with the acquisition of a 55% interest in Texas Regional Medical Center at Sunnyvale, a 70-bed physician-owned community hospital 15 miles east of downtown Dallas.
Tim Adams, Tenet's Central Region CEO, says the hospital chain likes leans towards a majority stake in its joint ventures.
"We typically don't do a minority interest, though not to say we wouldn't," Adams says. "There are a lot of business reasons why we would want to be the majority partner. Without being a majority partner the partnership would not benefit from a lot of what Tenet could bring to that partnership."
And what does Tenet bring to the deal?
"One, it brings some scale to that hospitals and a few other facilities that are in that market. This is our fourth hospital in the Dallas market and the 18th hospital in the state of Texas," he says.
"We have two other facilities that are within 10−15 miles so it will be a nice scale of three facilities on the East Dallas corridor that enable us to take a step forward in our goal of building an integrated network in that East Dallas corridor, as well as strength in the hospitals current operating performance and clinical programs.
Tenet owns a controlling interest in three other hospitals in the Dallas area, including Lake Pointe Medical Center in Rowlett, Doctors Hospital of White Rock Lake in Dallas and Centennial Medical Center in Frisco.
In addition, Tenet operates 12 outpatient centers in the market with a population growth of 2.5% annually, which is nearly four times the national rate.
"We are bullish on Texas and the Dallas Metroplex area is a nice growing market, particularly the Sunnyvale area is growing at 4 times the national average and it's a great community," Adams says. "You have a high quality, very supportive medical staff and a highly engaged employee based so it has all of the right ingredients to have a very successful thriving hospital."
Texas Regional Medical Center opened in 2009 and clinical services include a cardiovascular center, spine program, obstetrics program and neonatal intensive care unit, surgical weight loss program and an emergency department. The 50 or so physician owners will maintain a 45% stake.
"They are a well-maintained and capitalized facility and there wasn't really any big capital investment that was needed early on," Adams says. "They've done a great job, as a stand-alone and they have been very successful in their first five years. With our partnership they'll be able to improve upon that success and take the organization to the next level."
Tenet operates 78 hospitals, 189 outpatient centers and Conifer Health Solutions consulting subsidiary.
Tenet and Florida Blue Create ACO
On another front, Tenet and Florida Blue, the Blue Cross and Blue Shield plan of Florida, have created an accountable care organization that covers nearly 10,000 Florida Blue commercial members in Dade, Broward, and Palm Beach counties.
The ACO took effect on June 1 and Florida Blue's members will have in-network access to Tenet's Florida-based ACO, the Advantage Health Network, which includes more than 900 physicians, as well as 10 acute care hospitals and 36 outpatient centers operated by Tenet Healthcare in South Florida.
This announcement follows similar arrangements between Tenet and Blue Shield of California, Independence Blue Cross and Blue Cross and Blue Shield of Texas. Not-for-profit Florida Blue has approximately four million healthcare members and serves 15.5 million people in 16 states through its affiliated companies.
A senior LifePoint executive discusses the organization's 80%–20% partnership deal with Rutherford Regional. Negotiations for three more North Carolina hospitals in the third quarter of this year are underway.
Duke Life Point Healthcare has finalized an 80% ownership stake in North Carolina's Rutherford Regional Health System.
The not-for-profit health system becomes the fourth in North Carolina to enter the Duke LifePoint affiliation, and another three hospitals are expected to join Duke LifePoint by this fall, says Jeff Seraphine president, Eastern Group at Brentwood, TN-based LifePoint Hospitals.
"In just a few years we'll have gone from a new partnership to something like seven hospitals in the state of North Carolina, one in southwest Virginia, and then some others from a national scale including Michigan and Pennsylvania," Seraphine says. "It's a very good start to the partnership and most importantly we are doing some great things in our communities and creating the values we thought we could together."
Rutherford Regional, based in Rutherfordton, NC, serves a three-county region just west of Charlotte, with a network that includes more than 130 physicians and 700 clinical and support staff. Financial terms of the deal were not disclosed, but Duke LifePoint pledged $60 million for capital improvements and facilities upgrades, and the proceeds from the deal are expect to free another $30 million for community health and wellness projects.
In addition, Rutherford Regional's tax status will change to for-profit and the system will pay local property taxes.
Rutherford Regional will continue to hold a 20% stake in the health system, with governance shared through a board with equal representation from both organizations.
Seraphine says Duke LifePoint did not go into the negotiations with a rigid game plan for affiliation, and was "comfortable" with a number of partnership plans proposed by Rutherford Regional.
"So, for us that question of is it 100% or 80%–20%, we are comfortable either way," he says. "A lot of the desire for that partnership really comes from the desire in the community itself and the boards we are working with and what they think is best for their organization at the time."
"We have found that the 80–20 has been a good place. But if that number changed a little bit either way, it is something we feel comfortable with. That is more up to the local board. They have found that to be a pretty good number with the amount of governance they continue to participate in."
Seraphine says a big question about determining the partnership structure depends upon how much the local partner wants to take responsibility for future investments.
"It becomes a balance. How much they want to have those proceeds that they could reinvest in the community? How much of those proceeds do they want to have available and how much do they want to be responsible for their share of the reinvestment going forward?"
"The other thing that makes it much easier is how we approach governance with them. Our governance and the way we share governance doesn't really change. So they can take less of a position without giving up a lot of governance. That is one of those places where we have grown to be comfortable in our partnership model."
Duke LifePoint is also in the midst of negotiations that could bring three more North Carolina hospitals into the fold in the third quarter of this year, Seraphine says.
"In just a few years we'll have gone from a new partnership to something like seven hospitals in the state of North Carolina, one in southwest Virginia, and then some others from a national scale including Michigan and Pennsylvania," Seraphine says. "It's a very good start to the partnership and most importantly we are doing some great things in our communities and creating the values we thought we could together."
"I don't know how long the window of consolidation occurs at the pace that it has been at in the last year or two but we feel very good about partnerships and the work being done and we are still seeing a significant amount of interest, so I would expect over the next year or two to continue to find ways to extend the partnership."
Competition within the healthcare sector will improve only when providers offer products that have "intuitive and measurable value" to consumers, says a healthcare policy expert.
The healthcare system features a unique blending of subsidies and regulations that make it difficult to fabricate a comprehensive and effective competition policy, says William M. Sage, MD, JD, a healthcare policy expert at the University of Texas at Austin.
William M. Sage, MD, JD
Healthcare Policy Expert
University of Texas at Austin
As a result, Sage says, antitrust watchdogs and regulators should place more attention on whether or not the goods and services created by healthcare providers are valuable to consumers.
In a recent paper published last month in Health Affairs, Sage suggests that competition in the healthcare sector will improve when providers offer products that have "intuitive and measurable value" to consumers.
That could include bundled payments for a particular course of treatment, or maintenance for chronic conditions, or diagnostic workups. Sage says some products could even come with a guarantee and a warranty that would incentivize providers to improve care quality and safety.
Sage, whose paper was supported by the Commonwealth Fund, expanded on his ideas in a recent interview. The following is an edited transcript.
HLM: What is driving healthcare inflation?
WMS: It is a combination of technology, lack of price sensitivity, subsidies of various sorts—all of the things that have been culprits forever. I don't think there is a new set of villains or even age-related demographics.
But we've gotten to a point in American healthcare where we have run out of money. Originally we seemed to be running only out of public money, but now I think we are even running out of private money with the squeeze on general economic growth and at a practical level salary increases for working Americans is being seriously jeopardized.
The numbers about what is happening with medical inflation over one year or another I always take with a large grain of salt because there are many things that go into those calculations and we've never been talking about cost decreases.
What we have been talking about are changes in the upward trajectory of healthcare costs. As long as we are doing that, given the baseline we are working from, we are spending too much.
HLM: How is healthcare competition policy flawed?
WMS: We have a very tentative competition policy toward healthcare. We encouraged the generation of new healthcare stuff in this country for decades. There was a very nice analytic essay written about 20 years ago by Lawrence Jacobs, who is a political scientist at the University of Minnesota, that while European countries tend to prioritize access to healthcare and then accept the supply of healthcare stuff that is consistent with relatively universal access, the United State has always prioritized the supply and then tried to give as many people as could afford it access to the stuff that we created.
At this point what we've done is created a competition policy that takes as a normal baseline this generation of new healthcare stuff in abundance and many of the capital investments that we've made over the years.
I would just observe that much of what seems to be the competitive landscape in healthcare today was not created through competitive forces and the competition policies that do nothing but protect that landscape aren't accomplishing much.
HLM: What are you suggesting we do to improve competition policy?
WMS: I don't claim to have a magic bullet. In fact a lot of what I am writing I would regard as common sense. But in healthcare we have such a history of both professional governance and public regulation and subsidy that we sometimes lose track of common sense.
The common sense for healthcare competition is that healthcare should be quicker and cheaper and more reliable and those are things that we should be proud of in healthcare in the same way we are proud of them in other sectors of the economy.
One reason our healthcare isn't quicker, cheaper or more reliable is that we haven't really thought about products in healthcare the way that other sectors in the economy think about products. I have a lot of experience dealing with regulated aspects of this sector and what I have observed is that in healthcare, we seldom buy things that are assembled into functioning groups of services that logically do us some good and that measurably do us some good.
Someone who is producing those products could attach some warranty to them. If it doesn't work as promised or expected we will fix it so it does work. That is not the same thing as insurance and it is not the same thing as a guaranteed cure. It's just saying that when we offer things for money in healthcare they should be assembled units that do measurable good and that you can put a warranty on.
HLM: Is the traditional healthcare sector capable of making these changes, or is that change going to have to come from outside?
WMS: It's a little of both. I often describe American healthcare as the world's most expensive cottage industry. Other people have described physician practices as the most undercapitalized businesses in the world.
What we are getting at here, is that the pots of money that exist in healthcare, the capital reserves that you can use to build businesses and grow and change businesses are not usually in the sectors that are actually most likely to change. They sit in the hospital sector. They sit in the insurance sector.
The sectors within the system that should be the most innovative tend not to make the capital investments they need but we have to get them to do that.
A lot of that is going to be unwinding regulation that is counterproductive. For example, all of the regulation that we have created over decades in the United States that keeps hospitals separate from physicians when they act as co-producers of acute and complex care.
It's not that other countries have solved these problems. But if you go to any country in Europe you will find that when we are talking about acute and complex care, these specialized services take place in and around the hospitals and the doctors who are part of [them] are employees of the hospitals. It is not a question of who is in charge. It's a question of there being an organized unit that is producing these products.
We in the US have created a series of regulatory obstacles and traditions that let doctors who are sitting in their private offices admit patients to community hospitals for free and use the hospital facilities and bill for it and nobody is organized much at all. From within the profession we have to make those changes or we have to demand it.
But I also think a lot of this will come from outside the traditional sector. That is why I write about the way that the healthcare system can work with people who are just living their lives and who haven't been designated as patients.
The same way these people run all kinds of things these days from their banking to their travel or whatever, they will be running a lot more of their healthcare. A lot of companies that come in to work in those spaces will be new. They may come from other sectors, but I think the biggest lesson for regulators is to get out of the way.
That doesn't mean that you aren't going to ever have regulation. But if you do want new sectors to come in and shake things up, you are going to have to get out of the way much more than we would otherwise be tempted to do.
HLM: It seems counter-intuitive that consolidating any industry could reduce prices. Is that possible?
WMS: There are simple answers to that question but it is probably a more complex story. I believe in antitrust enforcement and my instincts are with the government nine times out of 10. But I would observe that a lot of the actions in antitrust have been trying to review and in some cases attempt to stop mergers involving hospitals or hospital acquisitions of physician practices in some pretty small communities around the country.
I don't think this is a good use of competition policy. It is much better to change the basis of payments, change the expectations, [and] open different services to new competitors than to obsess over a community of 50,000 or 250,000 people and whether or not there are two or three hospitals.
For example, there are going to be more and more concerns about hospitals acquiring primary care physician practices. Well, step back a little and think about it and you'll realize that there are so many professionals who can provide a lot of primary care other than today's physicians.
We will start with very well trained nurse practitioners and advanced practice nurses, but we can go beyond that if we decided to be innovative. If we could loosen the indefensible barriers to market entry that keeps these people from participating there never would be a coherent submarket in primary care physician services that we would have to worry about getting consolidated.
On some level, it is silly to think there would ever be consolidation in primary care practices because basic medical care in today's day and age come from so many different directions that there will always be a new or potential competitor. That is the kind of thinking that is missing.
That said, there are some great things the antitrust agencies are doing. In a lot of communities there are very large health insurers and very large healthcare providers, typically the hospitals, have a pretty good thing going and they have for many years and whether they are doing this deliberately or not, the upshot of much of their market behavior is to preserve their current benefits and keep other competitors out.
The antitrust authorities are looking for those situations and bringing cases against that type of anticompetitive conduct —that is good work.
I just can't get excited about picking a small market and paying a bunch of economic experts millions of dollars to do retrospective analysis of those markets. They do very sophisticated analyses and the data they use are not the data that really tells about the future of healthcare. As we researchers like to say, 'garbage in garbage out,' no matter how big your model.
HLM: A lot of what you are talking about sounds like value-based care. Are there any distinctions?
WMS: There is always going to be overlap. I offer a common sense, keep-your-eye-on-the-ball way of looking at a lot of the things that are going on. Certainly things that are phrased as value-based care or pay-for-performance have some significant overlap.
The things people are doing the most of, which is payment reform and information transparency, are probably the best starting points for improving the product. But you have to be thinking about the product and there are a few clear lessons.
One clear lesson is that the opposite of fee-for-service is not necessarily capitation. We have acquired a very bad habit of thinking that as soon as you discard fee-for-service you have to be an insurer.
Bearing insurance risk is not something that physicians or even hospitals do well. They have neither the capital nor the expertise. It seems [that] periodically we keep asking providers to bear insurance risk because we think somehow they are good guys compared with conventional insurers. But this all tends to lead us astray.
The value-based care sometimes is very well aligned. Sometimes the bundle is a bundle that is a coherent product that someone has put a warranty on.
But often it slides into some sort of jumbled capitation and then what you are talking about is insurance risk, which means are the people you are taking care of likely to get sick or not, rather than is the care you are providing going to work or not? That is a big difference.
HLM: What role will healthcare consumers play in mandating the changes you are talking about?
WMS: As we go forward pragmatically on consumer price sharing, if we are offering people real products, then I think they will be good consumers about those products. If on the other hand, we don't pay attention at all to the product and ask people to price-compare a random MRI or a lab test or some consultation that may or may not do them any good, then I don't think they'll ever be good shoppers.
The big problem at the VA is that it's competing for doctors with every hospital in the country, physician practices, insurance companies, urgent care centers, retail clinics, and community health centers.
It should not, however, generate surprise. The long waiting lines at the 150 VA hospitals across the nation are largely because of staff shortages. The New York Times reports that the VA is trying to recruit 400 primary care physicians.
American Federation of Government Employees National President J. David Cox Sr. was spot on when he said: "There is no solving the wait list issue without first solving the staffing issue."
This problem won't be solved in a few weeks or with reassuring sound bites, quick fixes, the resignation of VA Chief Eric Shinseki, made-for-TV Congressional inquiries, campaign grandstanding, or even money.
This shortage will last as long as it takes to figure out a way to treat people without a reliance on primary care physicians, or until we can train sufficient numbers of new primary care physicians to replace the growing ranks of their retiring older colleagues. We're talking years, perhaps a decade or longer.
We've been hearing about the "looming physician shortage" for decades. It looms no longer. It has dropped upon us and it's not going away soon.
Marginalized people in this country have been dying for years from failure to access healthcare. The VA debacle shows that even people ostensibly with health coverage will not have an easy time accessing physicians, and that some of them will die because of it.
A big problem for the VA is that every hospital in the country wants to hire primary care physicians. So do physician practices, insurance companies, walk-in clinics, companies providing workplace clinics, community health centers, and any number of concierge and niche providers.
"Primary care physicians are our No. 1 most requested searches for eight straight years. It's the most competitive market," says Travis Singleton, vice president of Merritt Hawkins, the Irving, TX-based physician recruiters. "The largest health systems on the planet tell you that primary care is the name of the game for the next two years."
"We are already in a market that is overstressed, but where the VA is particularly in trouble is that they are competing against a proliferating number of facilities and delivery options like we've never seen."
A Litany of Hurdles for the VA
"Obviously there is the PR issue, and they are dealing with a bureaucracy that was created in the 1980s that is confusing and inefficient and makes it more difficult to get things done," Singleton says.
Salaries for family practice physicians at VA hospitals range from about $95,000 to $195,000 depending upon factors such as experience. In the private sector the average salary for a family physician is $199,000 with outliers as high as $293,000, according to Merritt Hawkins' annual survey of physician compensation.
"The compensation is not going to compete with the private market. In some respects that is a known. Physicians know they're not going to make as much as at XYZ health system. The issues is that now that gap is greater than we've ever seen, so it is a little harder to ignore."
As for the immediate task of recruiting 400 primary care physicians, Singleton says "that is such a massive undertaking I am not even sure how to put it into words."
"The only groups that would even be able to accomplish that in this market would be someone that just flat out bought a 200-physician group. Otherwise you are recruiting one by one. You have to take a step back and ask, 'is what we need even realistic with the resources and options we have at our disposal?' The answer is undoubtedly is no. That's not just the VA. I don't know a health system that could do that."
Instead, Singleton says, the VA might be better served with internal adjustments to mitigate the shortages, and by working with outside partners to bolster the clinical staff.
"You are going to have to look at a temporary and a permanent labor force and use them in the most efficient ways possible," he says. "I don't know if the system right now in the VA is set up to allow you do that."
"If there is any good result out of this tectonic shift they are going through it is that the VA is going to reevaluate systems and processes that they have had in place for years that aren't efficient. They needed to before and unfortunately it took something this drastic to move the Titanic."
The VA as Harbinger
The VA scandal is likely a harbinger of what our broader healthcare system can expect in the coming years. The American Medical Association reported in 2012 that 43% of the nation's one million or so doctors are age 55 or older. That figure was 35% in 2006. The demographics are relentless and they don't lie. This is not a favorable trend.
"What's happening at the VA is horrible, but my fear is where else is this happening where we can't track it?" Singleton asks. "Who else out there is not able to see a physician and God forbid it becomes a fatality that we will never know about because, say, a county hospital's ER was understaffed. It is a little unlucky for the VA that it's in this highly visible world."
There are other challenges surfacing with the shifting healthcare landscape.
"The physicians we have are working less, or becoming more specialized and going into areas where we don't need them," Singleton says. "And it's not just the patient wait times. Now you have to look at Medicare and Medicaid acceptance. You look at these new health plans with deductibles that are sky high."
If the VA can be fixed, Singleton says, "there should be no problem fixing the private markets. But I expect this is going to get worse before it gets better."
The process is going forward despite the protestations of the American Medical Association, which has complained that CMS "has missed nearly every deadline laid out in the law and regulations to implement it."
The first part of a two-stage federal registration process for physicians and teaching hospitals that want to review or dispute payments and gifts they received from drug and medical device makers opened on June 1.
The Centers for Medicare & Medicaid Services announced earlier this year that on Sept. 30 it will make public "transfers of value" reported by vendors under the Physician Payments Sunshine Act.
Providers will have the opportunity to dispute the vendors' claims before the reports go public, but only if they register this summer. The vendors' reports are expected to be made available to providers sometime in July, CMS said in a media release.
The first step is for physicians and teaching hospitals to register using CMS's Enterprise Portal, which is the gateway to CMS's Enterprise Management system so they can access the information provided by the industry.
Phase 2 begins in July and allows physician and teaching hospital registration in the Open Payments system to review and dispute data submitted manufacturers and group purchasing organizations before the data goes public.
Disputed data that is not corrected by the industry will still go public, but it will be marked as disputed.
The process is going forward despite the protestations of the American Medical Association, which has complained that CMS "has missed nearly every deadline laid out in the law and regulations to implement it."
The nation's largest physicians' association noted that pharmaceutical companies and medical device makers were supposed to submit their reports by March 31, but that the database has yet to be completed.
Given those delays, AMA President Ardis Hoven, MD, called in vain for an extension of the registration and review period for physicians. CMS has taken no action the request, so Hoven is urging physicians to register.
"The Sunshine Act will impact many physicians with a current medical license and it is important that they are properly registered to review and ensure the accuracy of the data reported by manufacturers and group purchasing organizations before the world sees it," Hoven said in prepared remarks.
"To avert one of the problems that came to light as a result of the Medicare claims data release earlier this year, we strongly urge physicians to make sure their information in the national provider identifier database is current."
Physicians are not required to register or send information to Open Payments. However, to ensure accuracy in the reporting, CMS is encouraging doctors to become familiar with the information that will be reported about them, and to communicate with drug and device makers and GPOs to ensure that the information they are submitting is accurate.
The AMA has set up a Sunshine Act Web page to help member physicians wade through the process.
